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Wet Seal Announces New CEO

May 30, 2003|Leslie Earnest | Times Staff Writer

Struggling retailer Wet Seal Inc. named former Walt Disney Co. executive Peter Whitford as its new chief executive Thursday, four months after dumping longtime leader Kathy Bronstein.

Wet Seal Chairman Irving Teitelbaum said the company, after hitting "a major bump in the road" last year, was "ushering in a new era" with Whitford's appointment. Teitelbaum made the announcement at the annual meeting to gasps of surprise from shareholders and employees.

The 48-year-old Whitford -- who last week quit as global president of Disney's retail store chain -- is following the path trod by former Disney executive Paul Pressler, who left that company's theme parks and resort division in September to become CEO of San Francisco-based Gap Inc. At Wet Seal, Whitford will be in charge of a retailer that has been having trouble connecting with its young, trend-conscious female customers. The company operates 622 Wet Seal, Arden B and Zutopia stores.

"The real turn is going to come when the fashion cycle shifts and they get the merchandise right," said Adrienne Tennant, an analyst with Wedbush Morgan Securities.

Wet Seal fired Bronstein in February after a bruising fiscal 2002, during which earnings plunged 86% and its stock declined 57%.

The company's business had fallen off when it shifted away from its core teenage girl customers and tried to attract slightly older shoppers.

The retailer also overestimated the appeal of the so-called bohemian fashion trend and miscalculated what teens wanted for the back-to-school shopping season.

On Thursday, Wet Seal's stock fell 9 cents to $10.51 on Nasdaq. Wall Street seemed to be grappling with what to make of the Whitford announcement.

The native Australian, who lives in Pasadena, resigned May 22 when the Burbank-based entertainment giant said that after years of trying to revamp its Disney Stores, it would sell or close them.

Analysts said the Disney division was suffering from overexpansion, a failure to respond quickly to shifting trends and weakened demand for merchandise that featured Disney's animated film characters.

"I did not want to be part of the sale or downsizing of the Disney Stores worldwide," Whitford said Thursday. "And I wanted to return to the apparel industry."

Before Disney, Whitford was chief executive of Structure -- now called Express Men's -- a trendy young men's apparel chain owned by Limited Brands Inc., which has had its own struggles in the past. He also had been chief executive of the U.S. division of Country Road Ltd., an Australian apparel retailer and wholesaler that no longer operates in the U.S.

Analysts said Whitford's retail experience was a bonus but questioned his experience in the particularly fickle world of teen girls' fashions.

"He has somewhat of a pedigree as far as executive management training," Tennant said. "It remains to be seen how his prior experience at the Limited's men's division and the Disney Stores, which is more of a kids concept, plays into the very competitive juniors market."

Like Pressler, Whitford probably will be more of an administrator and "big-picture guy" than a hands-on merchant, as was Bronstein and Gap's prior chief, Millard "Mickey" Drexler, said Richard Jaffe, an analyst with UBS Warburg.

Wet Seal has strong merchants in place to lead all three of its divisions, according to analysts. They have praised the more decentralized way the company has begun doing business since Bronstein's departure.

"He has to leave the subtleties of teen fashion to the divisional presidents in charge," Jaffe said.

Teitelbaum, who has been serving as interim chief executive since Bronstein was fired, said Whitford will bring a strong combination of skills to the job when he begins June 30.

"Peter combines rare qualities of interpersonal skills, strong retail execution and is a great merchant," he said. "That's a pretty formidable group of skill sets."

Whitford said his first priority would be to focus on the flagship Wet Seal division, which has now reset its sights on teenage girls.

His goal is too ensure that Wet Seal offers "leading edge fashion," outfits customers from "head to toe" and gets merchandise into stores quickly, he said.

He said he also wanted to ensure that Wet Seal and Arden B chains are well differentiated. Arden B, named after Bronstein's daughter, targets slightly older customers.

"I think they had merged together," said Whitford, who is married and has four children.

Zutopia, which targets younger girls, holds promise partly because it operates in the so-called tween market, a less crowded retail niche, he said.

It is too early to say whether there are additional changes ahead for the company, Whitford said. Wet Seal employs 7,400.

"I really enjoy the challenge of change," he said. "And that's what I bring to the table."

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